ISP cries foul over Telstra plans as ACCC investigates

Telstra's cut-price broadband Internet offers have provoked an investigation by the Australian Competition and Consumer Commission, with competing Internet service providers complaining that their viability is in jeopardy.

Netspace, a national broadband DSL Internet service provider to the consumer and small business markets, said it was "absolutely shocked" by the entry level deals offered by Telstra, as the cost of the new plans are below the wholesale price charged by the carrier to competing providers.

"If we wanted to compete with Telstra's new deals, we'd be losing at least AU$5 per month per subscriber, and in regional areas it'd be a AU$10-AU$15 loss for each customer per month" said Stuart Marburg, managing director of Netspace.

Telstra's new broadband deals -- launched the day before bitter rival Optus started offering its residential DSL services -- kick off from just AU$29.95 per month.

The ACCC told ZDNet Australia its investigation had already commenced and that it would seek to ensure that there was no predatory pricing undertaken by Telstra. An ACCC spokesperson says the market inquiry was provoked by the fact that "they're [Telstra] selling to retail cheaper than to wholesalers, making it near impossible for others to profit".

Marburg hopes the ACCC will approach the matter "with a sense of urgency", saying he wants Telstra to be forced to withdraw the product from sale until they offer wholesale prices that allow competition in service.

"Consumers need choice, and competition drives innovation in the broadband market. I just hope Telstra Wholesale will rethink its wholesale pricing so that the industry can innovate and grow the broadband market together," said Marburg.